Saturday, October 9, 2010, 07:42 AM
Posted by Administrator
I just read that Bank of America and PNC Bank are taking a moratorium from filing new foreclosure cases and instructing their lawyers to sit on their hands in pending cases. My understanding is that these banks are doing this because more and more evidence is coming to light that:
-Paperwork transferring ownership of the mortgages was signed off on...not by employees of the mortgage owners but by employees of companies who were in the prepare-papers-and-sign business.
An Assignment of Mortgage signed by "Mary Smith" which recited that "Mary Smith" was a Vice President of the bank was probably prepared by s small company with offices in South Georgia and, really, "Mary Smith" worked for it...and not for the bank.
-Nobody really knows who owns a substantial portion of the mortgages out there. Foreclosure suits freuently name, for example, "XYZ Bank as Trustee for the Certificate Holders of Series 123 mortgage backed securities...". A few months later, the Plaitniff's lawyers will ask the court to allow the Plaintiff's name to be changed to, for example "ACME Bank, as Trustee........". Then, a few months later, the lawyers will be back trying to "correct" the Plaintiff's name again.

As I sit here waiting for the AMAZING RACE to start, CBS News just reported that 40 states are jointy investigating issues with mortgage paperwork.

When mass foreclosures began...about 3 or 4 years ago....some lawyers decided that instead of charging for the work they did, they would charge a flat fee for every month they kept the client in their house after a foreclosure case were filed. Instead of paying a $2,000 or $4,000 monthly mortgage, you would pay the lawyer $500 per month.

Other lawyers (like me) thought this fee arrangement was tacky and that it seemed destined to encourage violation of an ethical rule that says that a lawyer defending a case should not delay the case.."solely for the purpose of delay". You are suppose to actually have a legitimate defense and not just keep a Plaintiff from getting a judgment by messing with the rules and jerking the Plaintiff around.

As it turned out, just about every mortgage foreclosure case out there does have a legitimate defense. Now..with the B of A and PNC announcement...and others soon to follow...homeowners will maybe be able to stay in their homes for years and years and years without paying. For homeowners, five hundred bucks a month may sound like a lot to pay a lawyer to do nothing but I don't think any lawyers are going to complain.

There are a lot of benefits to delaying mortgage foreclosures indefinitely:
-Fewer homes on the market means prices will stablise...home prices might even increase.
-Worthwhile modifications may be easier to come by. (Now, most lenders won't do meaningful modifications and most homeowners who do modify their loans land up defaulting.)
-Homeowners who can't pay their mortgages can, at least, keep the a/c on and the vandals out. Abandoned houses go to crap quickly.

I have changed my opiniong of the $500 a month lawyers, I no longer have any problem with them. They will make truckloads of money and join the super-rich. And, if I critize them, nobody will ask me out for drinks on their yacht.

Editor's Note: Bob Smith is a retired South Florida lawyer who now lives in Northern Wyoming where there is no foreclosure crisis and where the largest body of water is about twice the size of the swimming pool at the Ritz-Carlton.
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